It’s been a crazy year in the markets, with large cap stocks doing good stocks and speculative small cap stocks… not so good.
Here’s a review of my forecast for 2021 and an update on my thoughts for next year. My predictions from a year ago are in italics.
1. Small caps are underperforming, especially the more speculative small cap stocks which are up sharply.
December 2021 update: the small cap index rose less than half that of the S&P 500 SPX,
and other major clues. And the most speculative small-cap stocks are down 50% or more. One of the predictions is correct so far.
Prediction for 2022: Small caps are underperforming again, but the good companies among speculative stocks that have collapsed are ripe for selection. Many will triple or quadruple in 2022.
2. FAANNG (FB, AAPL, AMZN, NFLX, NVDA, GOOG) is trading disparately with FB, AAPL, GOOG having a good year, NVDA is trading flat, while AMZN and NFLX underperform.
Update December 2021: They all had a good year and NVDA doubled down. This prediction was clearly a failure.
Prediction for 2022: FB, NFLX outperform this year, NVDA is, yes, flat, while AAPL, AMZN and GOOG are down a bit for the year.
3. Oil trades at $ 25 at one point, spends most of the year in the top $ 30.
Update December 2021: Haha, not even close. Having said that, oil was only $ 40 when I wrote this. But he never looked back and spent most of the year double my expectations.
Prediction for 2022: Oil is trading below $ 50 at one point, but spends most of the year in the 60s.
4. Real estate prices are stabilizing as prices in urban areas stop falling while prices in suburbs and countryside lose momentum.
December 2021 update: This prediction was correct.
Prediction for 2022: Real estate is having a tough year as interest rates soar for homebuyers and the frenzy of having a second, third or 10th ABNB Airbnb,
5. Interest rates rise year round and the cost of borrowing for businesses, homeowners and the US government is up 50-100% after hitting current historic levels.
December 2021 update: Rates are indeed up about 50% overall for businesses, homeowners and on treasury bills as well.
Prediction for 2022: Rates will continue to climb gradually, but perhaps only 20% to 30% higher than current levels.
6. The Chinese Communist government continues to crack down on its giant companies, on Hong Kong and push back the limits of its power on a geopolitical scale. Governments around the world will continue to feign dismay, but will continue to do nothing about it but send out press releases about their dismay.
December 2021 update: Wow, this one proved prescient as China’s crackdown on its biggest companies hardened and China effectively pushed the limits of its power on a geopolitical scale . Meanwhile, the Olympics will be held in China and most of the world’s governments are feigning dismay.
Prediction for 2022: China’s pendulum swings the other way, and the Chinese stock market is having a good year. Yet nothing really fundamental changes, and the Chinese stock market will be in a good position to be bypassed.
7. Biden and Democrats are passing some form of new tax code, which will include thousands of pages of new loopholes, subsidies, and protections for giant corporations, banks, and special interests, just like Trump and the Republicans did. Real tax rates will fall for most giant corporations, banks, special interest groups, and people who make millions, but will rise for the middle class and the poor, just as they did under Trump. and Republicans. Republicans will pretend to hate the tax bill but it will pass anyway, while Democrats will claim it will do a lot to help their base, just as Democrats have claimed to hate Trump’s tax bill but he has when even passed while Republicans claimed he had done something to help their base.
December 2021 update: Republicans will say it’s not true and so will Democrats, but I think if you step back from the rhetoric that’s exactly what build back better and all the rest what our federal government is doing to pretend it is doing something to help you or to help protect your rights.
Prediction for 2022: Partisan tensions continue to mount, fueled by angry headlines from “both sides,” and this makes it impossible to pass bills measured in trillion dollar increments. Election claims intensify in the next election and neither side will admit that the other has won. And I’m not sure how that resolves in a good way if fans continue to swell their ranks and follow this controversial path, but that won’t be a thing in 2022.
8. Green stocks, including alternative energy and cannabis stocks, will retreat sharply between early and mid-2021, and then morph again into an incredibly large giant bubble, which will collapse shortly after that. the Biden administration will have adopted its aforementioned tax package. , which will of course have shifted the billions in subsidies, welfare, and protections Republicans prefer for oil / gas companies to alternative energy companies Democrats prefer.
December 2021 Update: Still in progress, as the Build Back Better package escalates.
Prediction for 2022: Green stocks perform appallingly in 2022, and I’m finally starting to sift through the wreckage for the good ones.
9. Bitcoin trades in a stable uptrend for most of the year, ending at around $ 38,739.92 per bitcoin.
Update December 2021: Bitcoin BTCUSD,
traded in a bullish pattern for most of the year but quickly hit $ 60,000 then fell back in half and is above what I thought was a pretty bullish price target for late of the year of bitcoin when it started trading at $ 29,000. Hell, bitcoin could end up near my price target after all, given that there are still 10 days of who knows what kind of action is going to play out.
Prediction for 2022: Bitcoin is having a rough year but isn’t crashing, ending somewhere around $ 38,739.92 per bitcoin.
10. The space revolution is getting more publicity under the name of Virgin Galactic
and other burgeoning space companies are having a succession of successful launches.
Update December 2021: Yes, the Space Revolution has gotten more publicity, but space stocks aren’t doing well until the end of the year here.
Prediction for 2022: The space hype goes into hyperdrive as SpaceX’s giant rockets enter orbit and start heading to the moon for 2023.
11. SpaceX’s Starlink is changing the world for its customers, especially those in rural areas who will suddenly have faster internet than their urban neighbors on cable / DSL or old-fashioned 5G.
December 2021 Update: Still Pending – Turns out it’s hard to create a space communications network that changes the world in just a year or two. It could take another year or two, but it is happening and I know it will change my personal world to have reliable, low latency high speed internet in my home instead of the choppy, slow and expensive DSL that we currently use.
Prediction for 2022: Starlink files for an IPO at the close of 2022 and the quoted valuation is around $ 200 billion.
12. I’m going to put a lot of pressure on myself to continue to outperform, to find the next Tesla.
at $ 50, to avoid painful losses, to be disciplined.
December 2021 update: Yes, as always.
Prediction for 2022: Same.
Thank you and happy holidays from my family to yours.
Cody Willard is a columnist for MarketWatch and editor of the Revolution Investing newsletter. Willard or its investment firm may own or consider owning securities mentioned in this column.